Close to six months after the government announced its regional airline policy, carriers are suddenly waking up to serious infrastructure constraints and competitive pressures that, they say, will impact their viability.
Regional airlines that have received approval include MDLR, Jagson Airlines, Star Aviation and Zav Air. Others like Mega Airways and Premier Airlines are still awaiting approval.
Under the new policy, regional carriers that fly small aircraft (below 40,000 kg) are exempt from all airport and navigation charges and pay concessional tax of 4 per cent on fuel against 35 to 36 per cent for national carriers.
Unlike national carriers they can start operations with only one aircraft (instead of five) and equity of Rs 12 crore (Rs 120 million), instead of Rs 50 crore (Rs 500 million).
Regional airlines are, however, allowed to operate flights only to or from one city (except in the south, where they can operate between Hyderabad, Chennai and Bangalore).
Infrastructure constraints are already hampering the operations of those that have begun.
"Most of the airports do not even have a proper runway, neither in strength nor in length and cannot support an aircraft of even 40,000 kg," said Koustav M Dhar, executive director, marketing and planning, MDLR Airlines, which has started operations.
He added that most of these small airports are defence airports doubling up for civilian duty so flight timings are restricted to between sunrise and sunset. These timings clash with the peak time in the bigger cities when smaller aircraft are not allowed.
The other serious problem is congestion in the larger airports. Most are reluctant to permit extra flights, even from regional carriers. This leaves these airlines with little option but to operate between the smaller cities.
"Traffic growth has only just begun between large and small cities. Between the small cities, it is yet to begin in a major way, which means that at least for now, there is no viable market for regional airlines in regions apart from the south," said Kapil Kaul, CEO (Indian Subcontinent), Centre for Asia Pacific Aviation (CAPA), which is advising some regional carriers.
"Regional airlines have no scope in the long run under the current policy," added Kishore Zaveri, chairman of Zav Airways, which will start operations from the north-east from April 14.
"People talk about connecting the north-east to the rest of the country, but how can we if we are not permitted to go to the other metros except Kolkata," he asked.
Zaveri added that the only way out for a regional airline was to upgrade its licence for pan-India operations after some time.
The disadvantage with national carriers is a key grouse since they get to enjoy all the concessions that regional airlines do if they fly smaller aircraft plus the additional benefit of flying anywhere in the country.
"Fortunately or unfortunately the south has three metros and precisely because of this we will face stiff competition from all the national carriers flying into these metros and there is no denying that the national carriers have an advantage," said Ashok Bhushan, executive director of the South India-based airline Star Aviation.
"The government has to see that the national players restrict operations on the routes on which regional players operate since regional players are not allowed to fly on the routes these carriers are flying," said J P Gupta, chairman of Jagson Airlines.
"National carriers picking up traffic from the smaller cities have a bigger competitive edge because they can pick up traffic to and fro, all over the country," he added.
